As a parting shot before declaring bankruptcy last year, Atlanta-based solar manufacturer Suniva Inc. complained to the U.S. International Trade Commission alleging that unfair subsidies from China’s government hastened its demise.
The verdict is in, and both the ITC and the Trump administration agree.
In line with his vow to get tougher on China, President Donald Trump on Monday agreed to slap 30 percent tariffs on imported solar cells and panels, promising to bring manufacturing in that troubled sector back to the U.S.
Suniva sought remedy under Section 201 of the Trade Act of 1974, which gives the president final discretion as to how to penalize foreign producers.
Since earlier duties imposed in 2012 on China didn’t fix the problem (Chinese firms simply migrated to Taiwan, then later to places like Malaysia, Vietnam and Thailand to evade tariffs) the president decided to assess the tariff globally, even electing not to exempt Canada and Mexico.
It’s unclear whether the new tariffs will provide enough upward pricing pressure on ex-U.S. producers to make American production economically feasible. Even without subsidies, other countries have lower production costs than the U.S., and panel prices have already fallen dramatically. That said, some Chinese firms have been said to be mulling U.S. factories.
Solar energy advocates, meanwhile, say the tariffs will actually have a job-killing effect while also harming the deployment of the green energy source, which has been booming in the last few years (albeit thanks to below-market prices on panels, according to the U.S. Trade Representative’s office.)
By playing favorites with a small sliver of manufacturing, the administration is harming installation jobs and downstream factory jobs that are much harder to outsource or automate, according to the Solar Energy Industries Association.
The association said Mr. Trump’s decision fails to recognize that 36,000 American manufacturing jobs — nearly all of the solar-related factory work in the U.S., are dependent on products beyond panels and cells, such as like power inverters and racking systems. These would be harmed by a substantial drop in installations.
SEIA projected that the tariffs will kill off 23,000 jobs this year alone.
“While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs,” said Abigail Ross Hopper, SEIA’s President and CEO, said in a statement.
Suinva’s home state of Georgia, which has an estimated 4,000 solar jobs and is among the top-10 states in utility-scale solar installations, could also be harmed.
That’s the worry of Georgia Public Service Commissioner Lauren “Bubba” McDonald, who testified against the tariffs in an ITC hearing last August.
“These tariffs will increase the price of the solar panels. Where there is increased price there is lower demand and lower demand means fewer installations and fewer jobs,” Mr. McDonald said in a statement Wednesday expressing “disappointment” in Mr. Trump’s decision.
Executives quoted in the SEIA’s release also found irony in the fact that Suniva, which is backed by a Chinese firm, and SolarWorld Americas, a German subsidiary which signed onto the petition later, are both owned by foreign entities.
Despite the hand-wringing, the tariffs also are lower than many feared or the 35 percent the ITC recommended, and they fall by 5 percent per year over the next four years before landing at 15 percent. The president’s decision also includes a quota of 2.5 megawatts per year that is exempt from the tariff.
Suniva couldn’t be reached Wednesday for comment on its plans, but news outlets reported the following statement from the company:
“We thank President Trump for holding China and its proxies accountable, imposing necessary tariffs, and closing the threatened Canadian loophole. Today the President is sending a message that American innovation and manufacturing will not be bullied out of existence without a fight.”
One of its Suniva’s creditors saw the move as a positive for the company’s prospects.
SQN Asset Finance Income Fund, which had provided a nearly $30 million loan for Suniva, issued a statement praising the decision, saying it could lead to repayment fromthe bankrupt solar firm, a Georgia Tech spinoff that was a darling of the U.S. government and an export powerhouse in its early days.
SQN, which bankrolled Suniva’s petition to the tune of $4 million in legal fees, said that the tariffs were in line with what Suniva expected and that the 2.5-megawatt quota was acceptable given the size of the U.S. industry.
The U.S. Trade Representative’s office said in a statement that the new tariffs could be the starting point for a discussion with China as to how to end a long-running tit-for-tat trade dispute. After the 2012 tariffs, China in 2014 issued its own measures targeting U.S.-made solar cells. See the full fact sheet from USTR here.
Bloomberg speculated that another “long-shot” solution could be a negotiated settlement that disburses the estimated $1.5 billion the U.S. has collected in duties to producers on both sides.
That’s what some solar-industry advocates had been shooting for in the run-up to Mr. Trump’s decision.
More Global Atlanta coverage of Suniva here.
See more analysis in Bloomberg here.